Average Annual Total ReturnsAs of Quarter End 06/30/2015

Expense Ratio and Sales ChargeAs of 10/01/2014 (updated annually)

Gross Expense Ratio4

3.71%

Net Expense Ratio

2.82%

Capped Expense Ratio5

1.95%

Max Initial Sales Charge

5.75%

CDSC

0.00%

12b-1 Fee

0.30%

Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. Investment return and principal value will fluctuate with market conditions, and you may have a gain or loss when you sell your shares.

The fund's overall Morningstar Rating measures risk-adjusted returns and is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) rating metrics.

A Combination of Disciplined Capabilities. The investment
process combines manager research with asset allocation analysis
to construct a multi-manager, multi-strategy fund seeking to
participate on the upside and reduce the downside.

Risk Management. The investment team applies extensive
risk processes, systems and data to help ensure risks can be
continually measured, monitored and managed.

Alternatives Expertise. K2 Advisors has 20 years of hedge
fund experience and a deep understanding of the hedge strategies
they cover.

Hypothetical $10K Investment

Investing in the Fund

The Fund's performance depends on the skill in selecting,
overseeing, and allocating Fund assets to the sub-advisors.

The Fund is actively managed and could experience losses if
the investment manager's and sub-advisors' judgment about
particular investments made for the Fund's portfolio prove to be
incorrect.

Some sub-advisors may have little or no experience managing
the assets of a registered investment company.

Foreign investments are subject to greater investment risk
such as political, economic, credit and information risks as well
as risk of currency fluctuations.

Investments in derivatives involve costs and create economic
leverage, which may result in significant volatility and cause
the Fund to participate in losses (as well as gains) that
significantly exceed the Fund's initial investment.

Lower-rated or high yield debt securities involve greater
credit risk, including the possibility of default or
bankruptcy.

Currency management strategies could result in losses to the
Fund if currencies do not perform as the investment manager or
sub-advisor expects.

The Fund may make short sales of securities, which involves
the risk that losses may exceed the original amount
invested.

Merger arbitrage investments risk loss if a proposed
reorganization in which the fund invests is renegotiated or
terminated.

Liquidity risk exists when securities have become more
difficult to sell, or are unable to be sold, at the price they
have been valued.

Please see the prospectus and summary prospectus for
information on these as well as other risk considerations.

Minimum Investment

$1,000.00

How Financial Advisors Help You

Speak to your financial advisor about whether this fund is appropriate for you. If you don't have a financial advisor, request a referral.

Printable PDF of fund - select items to include

Note that with the exception of the Hypothetical investment, fund charts are not included in the printable viewHistorical data is not shown in the printable view, except for Calendar Year Returns, and previous year Tax Information.

You need Adobe Acrobat Reader 6.0 or higher to view and print PDF documents. Download a free version from Adobe's website.

Important Legal Information

Total Returns include change in share price, assume reinvestment of all distributions, and reflect the deduction of fund expenses and applicable fees. Total Returns With Sales Charge: returns reflect the deduction of the stated sales charges. Total returns, distribution rate, and yields reflect any applicable expense reductions, without which the results for those impacted funds would have been lower.

For more information on any of our funds, contact your financial advisor or download a free prospectus. Investors should carefully consider a fund's investment goals, risks, sales charges and expenses before investing. The prospectus contains this and other information. Please read the prospectus carefully before investing or sending money.

Most Franklin Templeton funds offer multiple share classes. Share classes are subject to different fees and expenses, which will affect their performance. In general, Class A shares have a maximum initial sales charge; Class B shares have a contingent deferred sales charge which declines over a period of six years, thereafter it is eliminated; Class C shares have a 1% contingent deferred sales charge; Class Z, Advisor Class and Class R6 shares have no sales charges nor Rule 12b-1 fees; Class R shares have no sales charges, but do have a Rule 12b-1 fee.

All investments involve risks, including possible loss of principal. The market values of securities owned by the Fund will go up or down, sometimes rapidly or unpredictably. The Fund's performance depends on the manager's skill in selecting, overseeing, and allocating Fund assets to the sub-advisors. The Fund is actively managed and could experience losses if the investment manager's and sub-advisors' judgment about particular investments made for the Fund's portfolio prove to be incorrect. Some sub-advisors may have little or no experience managing the assets of a registered investment company. Foreign investments are subject to greater investment risk such as political, economic, credit and information risks as well as risk of currency fluctuations. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund's initial investment. Lower-rated or high yield debt securities involve greater credit risk, including the possibility of default or bankruptcy. Currency management strategies could result in losses to the Fund if currencies do not perform as the investment manager or sub-advisor expects. The Fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Merger arbitrage investments risk loss if a proposed reorganization in which the fund invests is renegotiated or terminated. Liquidity risk exists when securities have become more difficult to sell, or are unable to be sold, at the price at which they have been valued. Please see the prospectus and summary prospectus for information on these as well as other risk considerations.

Footnotes

For performance reporting purposes, the inception date for Classes A, R, R6, Z, and Advisor Class shares of all Franklin Templeton Funds is the date of effectiveness of the fund's registration statement or the first day the fund commenced operations. For Classes B and C shares, generally the inception date is the first day the fund commenced offering such shares. Exceptions: Franklin Income Fund Class B uses the inception date of the old Class B shares, renamed Class B1. Templeton Global Balanced Fund Classes A and C use the inception date of the old Class A and C shares, renamed Class A1 and Class C1. For Mutual Series Funds, Franklin International Small Cap Growth Fund, Franklin Large Cap Equity Fund and Franklin Pelagos Commodities Strategy Fund, the inception date for Classes A, B, C, R and R6 shares is the funds' oldest class', Z or Advisor, inception date. Franklin Money Fund Class R6 inception date is the first day it commenced offering such shares.

Net Asset Value — The amount per share you would receive if you sold shares that day.

Public Offering Price — Purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.

The Gross Expense Ratio does not include an expense reduction contractually guaranteed through at least 9/30/15. Fund investment results reflect any expense reduction and fee waiver ("Net Expense Ratio"). Without these reductions, the results would have been lower. Please see the prospectus for additional information.

The investment manager has contractually agreed to waive or assume certain expenses so that total annual fund operating expenses (excluding Rule 12b-1 fees; acquired fund fees and expenses; expenses related to securities sold short; and certain non-routine expenses) for each class of the fund do not exceed (and could be less than) 1.95% until 9/30/15.

For US residents only.

Clicking OK below will take you to an independent site. Information and services provided on this independent site are not reviewed by, guaranteed by, or endorsed by Franklin Templeton or its affiliates. Please keep in mind that this independent site's terms and conditions, privacy and security policies, or other legal information may be different from those of Franklin Templeton's site. Franklin Templeton is not liable for any direct or indirect technical or system issues, consequences, or damages arising from your use of this independent website.